For Fast Company’s Shape of Tomorrow series, we’re asking business leaders to share their inside perspective on how the COVID-19 era is transforming their industries. Here’s what’s been lost—and what could be gained—in the new world order.
Nick Green is the CEO of Thrive Market, a membership-based e-commerce retailer selling organic and sustainable items at wholesale prices.
Like every grocer, we’ve seen a huge surge in demand since the start of COVID-19. When people prepared to shelter in place at home, we saw bunker-building behavior. Then, further into the quarantine, we saw people try and replicate their normal shopping behavior from their homes, online. We brought in over a hundred thousand new members on our site. It’s been the fastest growth in our company’s history.
We had to scale our fulfillment centers—we doubled our workforce in three and a half weeks— without compromising on safety. Workers maintain social distancing rules and wear masks. Everything is wiped down and cleaned between shifts, and we stagger breaks. We curate products from third-party brands and sell them at wholesale prices on our site. Those were hard to increase because those brands are getting pressure from all retailers to ramp up production. Then 30% of our sales are our own brands. That has also been difficult to scale. We’re often pre-buying ingredients before harvest, so the lead times are longer.
Nick Green, Thrive Market
During COVID, everyone has become a conscious consumer.”
Five percent of Americans shopped for groceries online in February, but that number climbed to 30% in March. Even if half of those people go back to shopping in brick-and-mortar stores, that’s still a 3x increase in the number of people shopping online. We believe that number is going to be much higher because what kept most people from shopping for groceries online, even if it’s a great experience, is the habit of going to the grocery store. If quarantine lasts for a couple of weeks they might go back to that, but if they order online for a few months and notice how good the quality and selection of goods is, they might develop a new habit.
We sell natural, organic products. Our selection is heavily curated and the ingredients for each item are very transparent. We have talked about the fact that we serve conscious consumers, but during COVID, everyone has become a conscious consumer, so our demand has gone up. People want to know where their products come from, but also what conditions our workers work under, and whether those workers are healthy. Because it impacts them.
David Lee is the CFO of the plant-based meat company Impossible Foods, which closed a $500 million investment round in early March and is now carried in about 2,700 stores nationwide.
So far there hasn’t been any disruption to our supply chain as we continue to grow. We increased our retail footprint 50x this year. We started the process well before COVID-19 but continued as we started supplying stores.
David Lee, Impossible Foods
Our technology can be dropped into any factory and can scale because we don’t have a lot of [the problems] the meat industry struggles with.”
We shut down our Oakland facility for two weeks to support our employees, and [so that] we could add additional capacity to it. We like to think that we treat our employees on the line at Oakland far better than the norm in animal agriculture. That’s inclusive of how we compensate them, how we provide equity to them, and how we provide the flexibility to address challenges at home, whether it’s childcare or something else.
We designed our supply chain to be scaled globally. Unlike many companies, our technology can be dropped into any factory and can scale because we don’t have a lot of [the problems] the meat industry struggles with: We don’t grow animals over years; we don’t ship cows and pigs to slaughterhouses and then process the meat. We [make our product from] plants, and it’s given us an advantage to quickly scale with co-manufacturers as well as with our own plant.
We’ve seen a lot of changes in the food-service industry as take-away and drive-through options have become more important. So we worked with our partner restaurants [and food suppliers] to help them deliver raw Impossible meat for customers to cook for themselves at home. Hundreds of places are doing that, including Cheetah, the food supplier in San Francisco, and Pat LaFrieda in New York. A few restaurants pivoted to create online general stores where people can buy ingredients. We’ve made raw Impossible meat available there to [some of them] starting in the third week of March.
Beth Ford is the CEO of Land O’Lakes, which owns crop protection company WinField United, animal product brand Purina, and Land O’Lakes dairy products.
We have been working all out just to keep in pace with the demand for our food products [in stores], especially butter and cheese. As customers saw things shutting down, there was a surge in demand for products with longer shelf life.
To protect our employees on the factory floor who are working all the time—six or seven days a week—we have a system in place: They take their temperatures before they come into work and again when they get there. We’ve also minimized the number of employees in a work area. We appreciate that a lot of employees have to deal with childcare. We want to recognize that extra effort, so we are paying them more for their work. We also extended our paid leave policies so they could deal with some of these issues.
With Land O’Lakes, we reduced the number of varieties [of products] and focused more on our core products. Then we were able to maximize manufacturing efficiency to meet demand. By reducing the variety of an ingredient, like cane sugars [which happens when we reduce the number of products], you can operate facilities more efficiently.
A lot of our grocery partners have seen a huge surge in demand, and ordering online has increased. For example, with Purina, we’ve always worked with retailers and suppliers, but we’re selling more through Purina.com. That online business is going to stay very important.
David Rosenberg is the CEO of AeroFarms, a vertical farming company with two locations in Newark and plans to expand abroad to Singapore and Abu Dhabi.
At AeroFarms, the essence of our value proposition is local food production at scale. Most “farmers” that you see on food packaging, especially greens—like Taylor Farms or Church Brothers—aren’t farmers. They’re actually aggregators. A different entity might take care of the harvest, and then the aggregators take care of the washing, packaging, sales, and marketing.
We realized that in order to scale, we needed more growing towers, and then more towers for washing and packaging that use automation. Sometimes producing the finished product [the costs of growing, washing, and packaging] is more expensive, but we [hope to] catch up on the expenses with the transport because it’s grown closer to the places we supply.
David Rosenberg, AeroFarms
We’ve had retailers say that they just can’t take any more product because their distribution centers are in such chaos.”
From a social distancing standpoint, the hard part for any farm is not the growing but the processing. [We] grow things at room temperature, about 70 degrees, but [when we] package [them], you want to keep the ambient temperature cold, maybe 30, 35 degrees. So it’s more expensive in that packaging area—and those areas are smaller with more people in them. So we had to bring our production down to about 60% of capacity just to social distance, and then we had to change our packaging lines around.
As restaurants closed, we also lost about 50% of our customers that were food cafeterias and restaurants. We also supply supermarkets, including Whole Foods, Amazon Fresh, and Shoprite, and that demand increased. But ramping up to meet it, because of the food packaging configurations, has been tough. We ended up donating a lot of our extra produce because we couldn’t package it to sell to supermarkets. We’ve also had retailers that say they just can’t take any more product because their distribution centers are in such chaos. So they’ve asked us whether we can deliver direct to the store. We’re not set up as a trucking company, so we can’t easily do that.
Jon Nudi is the president of North America Retail for General Mills, the food company behind brands such as Cheerios, Betty Crocker, and Annie’s.
Since the pandemic really hit at the beginning of March, we’ve seen our business up dramatically. In the U.S., our [sales were] up north of 40% in the month of March, and up north of 30% in April. Obviously the shift to [staying] home is probably the biggest driver [of this growth]. But we believe that in the longer term, the economic impact [on the country] is going to be probably worse than anything that we’ve seen in our careers.
Jon Nudi, General Mills
There are many consumers that frankly, didn’t know how to cook very well or didn’t cook.”
One of the things we’re trying to do [for customers] is provide resources. There are many consumers that frankly, didn’t know how to cook very well or didn’t cook. We have two of the top five food websites in the country between BettyCrocker.com and Pillsbury.com. We’ve seen daily traffic up 100% year over year. We’ve shifted our content to really teach consumers how to make simple meals, to provide recipes that really work for the modern consumer. Hopefully for the long-term [this] will be a bit sticky as consumers become more comfortable cooking or baking, whatever the recipe might be.
We’ve also seen a significant spike in e-commerce. In fact, we’re probably two to three years into the future from where we expected to be—just from the last six or eight weeks. Prior to COVID-19, about 4.5% of our total sales came from e-commerce. Today, it’s 6.5% percent.
We have 26 manufacturing facilities across the U.S. and north of 8,000 employees working in those facilities. We have strong protocols in place. We socially distance in the plants, including in break rooms. We’ve shut down some packaging lines if they were too close to each other. As we’ve had some cases of COVID pop up, the protocols kick in, and we’ve been able to isolate those that are sick as well as those who’ve been impacted and keep our plants running.
Making product is one thing. Shipping is a whole other thing [with demand surging]. We had to prioritize what orders were shipped on what days. And our retail partners had to prioritize what they would need to have. The reality is there wasn’t enough capacity from a logistics network standpoint to get everything shipped in. Some things were just not on the shelves and it took a little while for them to come back.
Some of our strongest performing categories were ones that I think many people maybe left for dead, things like Progresso Soup. In the early days that was up more than 100% year-over-year. Hamburger Helper, which hadn’t grown in a few years, was up a significant amount. Then baking products have done incredibly well: Betty Crocker and Pillsbury and Gold Medal flour. The growth rate that we’ve seen for those businesses is unlike any we could have imagined. Some of these old, trusted brands are definitely working hard for us.
One of the things we’ve done over the last decade is improve many of our products. From a nutritional standpoint, [that means] taking sodium out; having cleaner ingredient decks; no artificial colors, flavors, and preservatives across the majority of our cereals. Then at the same time, we made them taste better. So as consumers come back and try some of these classics products that they haven’t had in some cases in many years, they’re going to be surprised by the experience.
More from Fast Company’s Shape of Tomorrow series:
- What restaurants will actually be like in a post-COVID-19 world, according to Chipotle, Panera, street-food vendors, and others.
- The leaders of the Mayo Clinic, Cleveland Clinic, Doctors Without Borders, and more tell us how healthcare is being transformed by the COVID-19 pandemic.
- Is advertising really dead? Here’s how the leaders of Droga5, TBWA, Wieden+Kennedy, and more are inching forward.
- The retail Armageddon may have finally arrived. Here’s what top executives at Nike, Athleta, and more think it will take for stores and brands to make it through.
- Insiders at LinkedIn, Glassdoor, and Jobcase tell us which companies will be hiring, what skills will be important, and how the workplace of the future will change.
- How COVID-19 has changed investing, according to VCs at Sequoia, Insight, Forerunner, 500 Startups, and more
- Architects and urban planners from Gensler, Harvard, and Bloomberg Associates explain the changes coming to our shared spaces.
- Insiders at Burning Man, Broadway, Meow Wolf, and more describe how the live events industry will emerge onto a new stage.
- Top execs at the NBA, Major League Soccer, and more describe a touchless, waitless, and possibly even more connected and diverse future of sports.